ATARI’S U.S. OPERATIONS WANT TO SPLIT FROM FRENCH PARENT

Video game maker Atari’s U.S. operations have filed for Chapter 11 bankruptcy protection in Manhattan, N.Y., in an effort to separate from their French parent company, which is filing a similar motion separately in France.

New York-based Atari said the move is necessary to secure investments it needs to grow in mobile and downloadable video games.

Atari’s U.S. operations have shifted to focus on digital games and licensing, including developing mobile games, and have become a growth engine for its owner. France’s Infogrames Entertainment first took a stake in Atari in 2000. It acquired the remaining stake in 2008 and changed its name to Atari S.A.

But the U.S. operations have been better performing than the rest of the company. In fiscal 2012, digital and licensing revenue both grew significantly and contributed 70 percent of revenue, while sales in bricks-and-mortar stores declined.

The move to separate the U.S. business comes after the parent company Atari said in December it was strained for cash. The French parent, which hasn’t made a profit since 1999 despite asset sales and restructuring, forecast a “significant loss” in 2012-2013, and said it would weigh all means of raising cash and had been talking to potential investors.

On Monday, Atari S.A. said it and its European operations would file related bankruptcy procedures in France concurrent with the U.S. bankruptcy filing.

CEO Jim Wilson said the moves were the “best decision to protect the company and its shareholders.” The auction process in U.S. bankruptcy proceedings will “maximize the proceeds” going to shareholders, he said. Creditors include accounting firm Deloitte & Touche, and retail chains Kmart and Walmart, although none are owed more than $250,000.

Atari, which turned 40 last year, was a video game pioneer with games like “Pong” and “Centipede,” but it has changed ownership several times amid financial problems. Today it lags behind game-making giants such as Activision Blizzard, the world’s largest by sales, and Electronic Arts.

Atari owns or manages more than 200 brands, including “Centipede,” “Missile Command” and “Rollercoaster Tycoon.” Its games can be played online, on mobile devices and on consoles from Microsoft, Sony and Nintendo, according to its website.

In its filing with the U.S. Bankruptcy Court in the Southern District of New York, Atari said it had $1 million to $10 million in assets and $10 million to $50 million in debt. It is seeking approval for $5.25 million in debtor-in-possession financing from investment firm Tenor Capital Management. Atari expects to sell its assets or confirm a restructuring plan within the next three to six months.